10 SaaS metrics to measure your product performance
by Hans Lambert Pedersen| Knowledge
Creating a SaaS platform is one thing, but how can you tell if it’s performing and generating an ROI? Discover 10 SaaS metrics to help you solve the mystery.
The exponential growth of the SaaS (software as a service) industry has seen some extraordinary growth in recent years.
What was worth $31.4 billion in 2015 reached $1617.1 billion in 2022 and continues to grow.
But like most things, with remarkable growth comes increasing competition in the market.
The key is to get a handle on your metrics. Once you’ve considered the behaviour analytics to define the ascent or downfall of your platform, it’s time to evaluate some crucial SaaS metrics. Let’s explore.
What are SaaS metrics?
SaaS metrics provide reference points for SaaS providers to calculate the overall success of their product. Multiple metrics across revenue, retention, user experience (UX) and behaviour enable SaaS builders to analyse the performance and growth of their platform.
Applying a range of these metrics means you can assess where to improve your product and make any necessary amendments.
But remember, too many improvements can result in feature creep! So, watch out!
What are the 5 most important metrics for SaaS companies?
Before we begin breaking down each SaaS metric and its value, let’s first get into the five most important SaaS metrics that your brand should be prioritising:
1. North Star Metric
We can define a North Star Metric for SaaS as the single metric encapsulating the central value that your product provides its users.
Now, depending on the function and focus of your SaaS platform, your North Star Metric will differ from other products on the market.
So, the best way to establish this is to answer the following questions:
- Why does your SaaS product exist?
- How does it improve the everyday life of its users?
- What makes it unique from your competitors?
For example, say your SaaS product is a Content Management System (CMS). The core value of your SaaS product is the ability of your users to manage the creation and modification of digital content. This ability becomes the overall usability and essential value of your product.
Measuring with either a customer satisfaction score (CSAT) or a customer lifetime value (CLV) are just some avenues that could provide you with your North Star Metric. To understand your North Star Metric, you must recognise the central value of your SaaS product to your consumer.
2. Customer churn rate
The customer churn rate is a sign that your SaaS platform isn’t hitting the mark. Ultimately, this SaaS metric shows how many users you’re losing. You can measure churn rate based on subscriptions or revenue. The measurements you apply can be as simple or complex as you desire.
You can calculate your average churn rate by taking the number of customers you had at the beginning of the month and comparing it to the next month. Although it’s never nice to see customers leaving, at least you know you have reason to investigate and the power to improve your product.
3. Customer effort score
A customer effort score is a SaaS metric that evaluates how much effort your user must apply to use your product. Essentially, the more effort required, the more unsatisfied your user is with the product. And the stats back it up, with 94% of users who rate “low effort” repurchasing in the future.
Simply ask your user how easy their experience was and provide a relevant rating answer system. Then, calculate your customer effort score with an average from all the ratings.
4. Net promoter score
Net promoter score (NPS) is a SaaS metric based on direct user feedback. To receive an NPS, you need to create an NPS survey for your users to provide insight. NPS surveys consist of a 10-point score per question, and you can divide your user answers into the following categories:
- 0-6 – detractors
- 7-8 – passives
- 9-10 – promoters
Take these scores and subtract the percentage of detractors away from your promoters to receive your overall NPS.
5. Customer satisfaction score
Customer satisfaction score (CSAT) also works with customer feedback but provides more flexibility than an NPS. Measuring your CSAT is vital for your SaaS performance metrics as it gives you an insight into the overall UX of your SaaS product.
Ask simple questions that align with your CSAT, such as:
- How satisfied were you with our SaaS product?
- Was there anything we could improve?
Provide a suitable rating scale for each question and divide all positive responses by negative before multiplying by 100 to receive a percentage.
5 Other important SaaS metrics to consider
These top five SaaS metrics are the most important as they assess the overall consumer value and satisfaction that define the usability and UX of your SaaS product.
However, it takes more than a few SaaS metrics to measure the overall value of your product. We recommend blending a mix of classic metrics with custom metrics.
So, here are a few more important SaaS metrics we like to use:
6. Time to value
Time to value is a SaaS metric that defines the time it takes for a user to find value in your product. Getting to this stage faster is the goal and will boost other SaaS metrics such as trial-to-paid conversion, CSAT and CLV.
7. Product adoption/feature adoption
SaaS product adoption metrics show how fast your users move from trialists to paying customers. After this product adoption stage, when your user has access to all the features, you then begin to measure the overall loyalty by whether it can retain long-term customers.
Feature adoption helps you separate what features work well and what requires attention and improvement.
8. Customer lifetime value (CLV)
CLV is based on revenue with the amount of money your customer pays during their subscription. This SaaS metric helps your company evaluate growth and financial scope for scaling up.
9. Repeat purchase rate
The repeat purchase rate is a great assessment tool to see how successful your SaaS product is by the number of consumers who renew their subscriptions. It can give you a good insight into the market and whether you should research competitors who may offer a better service for your consumers to jump ship.
10. Customer acquisition cost
Customer acquisition costs (CAC) show your business how much it is to obtain new customers, alongside the value they bring to your business. Essentially, this SaaS metric reveals whether you have a viable business model and should be combined with CLV.
Speak to SaaS product specialists to help with your metrics
At Stoked, we love seeing our client’s SaaS product metrics on the right side of the scale. Because building digital products and transforming businesses with solutions that enhance the everyday life of their customers is our mantra.
At the heart of our digital product design and development are the core value and usability of your product. We believe that when you take care of this principle, the other metrics will fall into place.
Get in touch today to see how we can help you improve your SaaS platform.